Report indicated repossessions could rocket this year

According to a recently released report the level of repossessions in the UK could rocket this year, as tight credit conditions and unmanageable living costs result in an increase in the number of homeowners that are defaulting on repayments. According to the Centre for Economics and Business Research the level of repossessions in the UK could go up by around 23% this year compared to last year, with around 33.400 set to lose their homes over the course of the year.

One recent report has already shown that the level of repossession orders has gone up, although not all of these will lead to repossessions, as in many cases the courts will suspend the order in order to give the homeowner time to come to an arrangement with the lender with regards to repayment of the arrears. However, with credit conditions very tight as a result of the global credit crunch many people are unable to look at reducing their repayments through remortgaging. In addition to this the cost of borrowing has been rising even through the base rate has been cut three times since December of last year.

One official from the CEBR stated: ‘The stark rise in repossessions forecast shows why the Chancellor and the Bank of England are so keen to sort out the problems in the wholesale financial markets. Unless or until this tap of mortgage finance starts to flow again, the outcome will be a reduction in house prices and an increase in repossessions.’

However, whilst repossessions are expected to rise officials have added that the level of repossessions are unlikely to come anywhere near levels that were seen in the darker days of the 1990s, when repossessions hit 75,000 a year.

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